Venture Capitalists

Venture capital funding in India has registered a manifold increase, and looks more promising by the day. Venture capitalists poured more than $777 million into 57 deals through September 30, 2007 more than twice the record-setting $320 million for the full year of 2005 and almost five times the $158 million notched through the first three quarters of 2006, according to the study released by Dow Jones VentureOne and Ernst & Young.

There are some warning signals too by some industry leaders. Sumir Chadha, managing director of Sequoia Capital India and co-founder and chairman of the US-India Venture Capital Association, said venture capitalists chasing the "hype" could lose their shirts. "It's not a great time to invest in India," he said in an interview conducted before the release of the report. "There's such a flood of capital. On average, the venture community will probably lose a lot of money in India."

Though information technology notched 31 deals in the period, the most of any sector, the business/consumer/retail segment got the most money, reeling in $376 million in 21 rounds compared with $327 million. More than 60 percent of the investments came in early-stage deals.